Employment VISAs: An International Comparison
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Employment VISAs: An International
Comparison
Alexandre Padilla† Nicolás Cachanosky‡
†
Email: Padilale@msudenver. edu. Address: Metropolitan State University of Denver,
Department of Economics, P.O. Box 173362, Denver, CO 80217-3362.
‡
Email: NCachano@msudenver. edu. Address: Metropolitan State University of Denver,
Department of Economics, P.O. Box 173362, Denver, CO 80217-3362.
11 Introduction
This chapter compares and assesses the various labor-based immigration programs that
OECD countries have adopted over the last fifty years. These programs deserve our
attention for several reasons.
First, reforming these programs is often seen as one of the solutions to the current
illegal immigration "problem" that has increasingly been at the center of the broader
immigration debate (Ilias, Fennelly and Federico 2008, 741). Second, US businesses
regularly call for a reform of these programs, particularly, the guest-workers programs
because these programs are failing to solve the labor shortages these businesses face. For
example, not only are high-skilled temporary guest worker programs such as the H-1B
VISA program so restrictive that businesses cannot hire the workers they need because of
strict quotas but also, as Slaughter (2014) argues, based on Bill Gates's 2008 testimony to
Congress "that for every immigrant hired at technology companies, an average of five
additional employees are added as well.” Similarly, Theo Eicher's 2011 Microsoft
Economic Impact Study (2013) of the United States and Washington state employment
multiplier estimates that this inability to recruit foreign workers translates into jobs not
being created: "a new job is lost about every 43 seconds, around the clock, every single
day that America is open for business."
US industries that rely heavily on low-skilled workers such as the farming industry
also suffer from the restrictiveness of guest worker programs. In 2004, for example, only
30 percent of the Arizonian lettuce crop was harvested; the rest was left in the ground to
rot. Losses amounted to nearly $1 billion (Powell and Gochenour 2013, 12). In 2011, in
response to a GOP proposal to require farmers to check all new hires through E-Verify, a
2federal database run by the Department of Homeland Security devised to ferret out illegal
immigrants, Bob Stallman, President of the American Farm Bureau Federation, stated that
"the problem with that is our current system, without an alternative labor supply, means
that we would lose those workers that are providing that $5 to $9 billion of production"
(USDA Office of Communications 2011).1 Other empirical evidence suggests that more
low-skilled workers would also provide indirect benefits to the US economy and society.
For example, Furtado and Hock (2010) find that "inflows of low skilled immigrants have
made it easier for high skilled US born women to pursue careers without having to sacrifice
family life" therefore leading to an increase of fertility of high skilled native women in the
United States. Similarly, Cortés and Tessada (2011) show that, "by lowering the prices of
services that are close substitutes of home production, low-skilled immigrants increase the
labor supply of highly skilled native women."
Given the benefits highly-skilled and low-skilled workers provide in the present
system where labor immigration, permanent and temporary, is strictly limited, it's
important to analyze alternative permanent and guest worker programs to see what reforms
could be implemented to reduce the losses associated with the current US immigration
policies.
Section 2 presents some basic statistics on employment migration to give an
empirical context of the immigration situation in OECD countries. Section 3 discusses the
various migration policies as they relate to employment of low-skilled and highly skilled
1
See also McKinley and Preston (2011).
3migrant workers. In section 4, we assess these policies. Section 5 provides concluding
remarks.
2 Employment Migration around the World: Statistics
Before discussing the employment VISA policies, a look at key indicators of migration and
employment in OECD countries provides economic context and constraints to popular but
inaccurate beliefs about migration. In this chapter we look at data and migration policy
from the following 23 OECD countries.
Table 1. List of countries
Australia Finland Ireland New Zealand Switzerland
(AUS) (FIN) (IRL) (NZL) (SWI)
Austria France Italy Norway United Kingdom
(AUT) (FRA) (ITA) (NOR) (GRB)
Belgium Germany Japan Portugal United States
(BEL) (GER) (JPN) (PRT) (USA)
Canada Greece Luxembourg Spain
(CAN) (GRC) (LUX) (SPA)
Denmark Iceland Netherlands Sweden
(DNK) (ICE) (NLD) (SWE)
2.1 Migration Stock and Flow
Figure 1 shows the average annual net migration rates (per thousand population) for the
years 2005-2007 and 2008-2010. Some countries, like Netherlands, Denmark, Norway,
Switzerland, and Luxembourg have notably increased the net migration rates after the 2008
crisis. Other countries, like Portugal, Ireland, Spain and Iceland have instead notably
decreased the net migration rates. In Ireland and Iceland, probably due to the extent that
4the European crisis affected these two countries, net migration rates for the period 2008-
2010 reverse to negative values.
Figure 1. Average annual net migration rates (per thousand population), 2005-2007
and 2008-2010
2005-2007 2008-2010
17
15
13
11
9
7
5
3
1
-1
-3
-5
-7
Source: OECD (2013)
Notes: Averages for 2008-2010 are based on 2009-2010 for Australia and Ireland, on
2008 and 2010 for Japan and on 2008 for Greece.
Table 2 shows the inflow of permanent immigrants from 2007 to 2011. There is a
wide dispersion on the percentage change of permanent immigrants between 2007 and
2011. In some countries the inflow of immigrants has been reduced to almost half of the
2007 levels and other countries have seen important increases in the inflow of permanent
immigrants. As a percent of the population, there are two distinct cases: Luxembourg with
5a high number of immigrants (3.7%) and Japan with a very low population of immigrants
with respect to total population (almost 0%).
Table 2. Inflows of permanent immigrants into selected OECD countries, 2007-2011
As % of
Pct. population
Country 2007 2008 2009 2010 2011 Chg.(2011/08) (2011)
United States 1,052,400 1,107,100 1,130,200 1,041,900 1,061,400 0.9 0.3
Spain 691,900 409,600 334,100 300,000 349,300 -49.5 0.8
United Kingdom 343,300 317,300 352,700 388,000 321,200 -6.4 0.5
Italy 559,200 482,600 384,200 349,900 312,200 -44.2 0.5
Germany 232,800 228,300 201,500 222,500 290,800 24.9 0.4
Canada 236,800 247,200 252,200 280,700 248,700 5.0 0.7
Australia 191,900 205,900 221,000 208,500 219,500 14.4 1.0
France 184,500 192,200 182,100 196,300 211,300 14.5 0.3
Switzerland 122,200 139,100 114,800 115,000 124,300 1.7 1.6
Netherlands 80,600 90,600 89,500 95,600 105,600 31.0 0.6
Belgium 50,300 51,200 64,200 64,100 76,500 52.1 0.7
Sweden 74,400 71,000 71,500 65,600 71,700 -3.6 0.8
Norway 43,700 48,900 48,500 55,900 60,300 38.0 1.2
Japan 108,500 97,700 65,500 55,700 59,100 -45.5 0.0
Austria 47,100 49,500 45,700 45,900 58,400 24.0 0.7
New Zealand 51,700 51,200 47,500 48,500 44,500 -13.9 1.0
Denmark 30,300 45,600 38,400 42,400 41,300 36.3 0.7
Portugal 42,800 71,000 57,300 43,800 36,900 -13.8 0.3
Ireland 120,400 89,700 50,700 23,900 33,700 -72.0 0.8
Greece* 46,330 42,900 46,530 33,370 23,210 -49.9 0.2
Finland 17,500 19,900 18,100 18,200 20,400 16.6 0.4
Luxembourg* 15,770 16,800 14,640 15,810 19,110 21.2 3.7
Iceland* 9,320 7,470 3,390 2,990 2,750 -70.5 0.8
Source: OECD (2013)
Notes: Includes only foreign nationals; the inflows include status changes, namely persons in
the country on a temporary status who obtained the right to stay on a longer-term basis.
Series for some countries have been significantly revised. Settlement countries include
Australia, Canada, New Zealand and the United States. Information on data for Israel:
http://dx.doi.org/10.1787/888932315602. The “*” symbols denotes national (non-
standardized) statistics.
Figure 2 shows the permanent immigration by category of entry or of status change
as percentage of total population. Italy, United Kingdom, Canada, Spain, Australia, and
New Zealand are the countries with the largest percentage of worker immigrants. Free
6movement, that is, the ability of European Union citizens to move freely to another EU
country represents 45% of international migration in the European Economic Area (OECD
2013, 25).2 On the other side of the spectrum, Japan, the United States, and Canada have
zero percent "free movement" immigrants.
Figure 2. Permanent immigration by category of entry or of status change into
selected OECD, 2011, and total for 2010 (percentage of total population)
Work Accompanying family of workers
Family Humanitarian
Other Free movement
2010 total
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Source: OECD (2013)
Notes: The values are based on standardized data.
2
This right of workers to move freely to another country of the European Union also extends to
countries of the European Economic Area: Iceland, Liechtenstein, and Norway. However, workers
from some EU countries such as Bulgaria and Romania may face restrictions when it comes to
working in Iceland, Liechtenstein, and Norway (European Commission 2014). The EU-Switzerland
agreement on the free movement of persons allows Swiss nationals to live and work in the EU and
allows most EU citizens to work in Switzerland without a permit. However, some restrictions apply to
nationals of Bulgaria, Croatia and Romania who need a permit in Switzerland. Similarly, some
restrictions apply to Swiss nationals to work in Croatia (European Commission 2014).
72.2 Immigrant Employment
Most countries have extended working opportunities for international students having
acquired a degree in their universities. Most have countries have developed special
programs to achieve that goal. One reason could be that skilled foreign graduate
immigrants boost innovation. 3 Figure 3 shows the maximum number of months an
international student is allowed to stay in the country and look for work after graduation.
The United States, though it doesn’t offer an extension of the student VISA, does offer
foreign students, studying in or having graduated from a US university, the ability to work
for twelve months through the “Optional Practical Training (OPT)” program. Even though
the job doesn't have to be in academia, employment through the OPT program requires that
the job must be directly related to the student's major area of study. Since the university is
the petitioner of the student's VISA, an OPT petition will require the university's approval
rather than the employer’s (U.S. Citizenship and Immigration Services, 2012).
3
Hunt and Gauthier-Loiselle (2010, 31) show that skilled immigrants increase innovation in the United
States. More particularly, they show that "immigrants patent at double the native rate, due to their
disproportionately holding science and engineering degrees. " They show that "a 1 percentage point
increase in immigrant college graduates’ population share increases patents per capita by 9–18
percent."
8Figure 3. Maximum duration of job-search months for post-secondary schemes in
different OECD countries
36
30
24
18
12
6
0
Source: OECD (2013).
For most countries, the immigrant share of the labor force with post-secondary education
is higher than the share of natives with post-secondary education (See Figure 4).
Figure 4. Country share of labor force with post-secondary education attainment,
2005
% foreign with tertiary education % native with tertiary education
0.50
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
Source: OECD (2011)
9At the turn of the twenty first century there has been an increase in the employment
of skilled immigrant labor (see Table 3). Some countries like Belgium, Switzerland,
Denmark, Ireland, Luxemburg, and Sweden are close to having half of the migrant workers
with post-secondary educations and Switzerland and Luxemburg have at least half of the
immigrant workers performing as managers, professionals or associate professionals.
Table 3. Skilled immigrant employment as percent of all employed immigrants
Employed immigrants with Employed immigrants working
post-secondary education as managers, professionals and
having arrived in previous ten associate professionals having
years arrived in previous ten years
1995 2006 1995 2006
Austria 13.2 27.3 19.6 29.1
Belgium 45.3 43.3 40.0 36.8
Denmark 38.5 44.3 33.5 34.9
Finland N/A 21.2 N/A 34.7
France 31.7 36.9 34.5 28.5
Germany N/A 29.1 N/A 25.5
Greece 18.7 12.5 10.1 3.6
Ireland 56.1 49.2 35.4 25.6
Italy 23.5 12.5 18.8 8.6
Luxemburg 24.6 48.7 30.3 55.2
Netherlands 26.6 29.6 29.4 29.4
Norway 6.6 31.8 N/A 25.2
Portugal 16.6 15.9 20.7 9.6
Spain 39.5 23.9 31.8 8.1
Sweden 38.3 45.4 N/A 33.8
Switzerland N/A 45.2 N/A 49.9
United Kingdom N/A N/A 46.2 38.6
United States 29.6 31.2 21.9 14.6
Source: Chaloff and Lemaitre (2009, p. 15).
The designation "managers" excludes managers of small enterprises (ISCO 13),
which covers small shopkeepers.
10However, immigrants also face higher long-term unemployment rates than non-
immigrants. Besides language barriers and extra legal costs associated with hiring
foreigners, international students lack work experience and do not have a local network as
developed as the native population does. Working restrictions for international students is
one policy that contributes to their relatively high long-term unemployment rates. Figure 5
shows long-term unemployment rates for 2012 for the total population and foreign-born
workers. In most cases the long-term unemployment rate for immigrants is considerably
higher than it is for the total population. In some cases it is more than twice as high, like in
Belgium, Germany, Netherlands, Finland, and Sweden. Only in Italy, United Kingdom,
United States, and Luxembourg, rates are similar.
Figure 5. Long-term unemployment for total population and foreign-born workers,
2012
Total population Foreign born workers
20
15
10
5
0
Source: OECD (2013) and World Bank (WDI).
Notes: Total population long-term unemployment comes from the WDI database at the
World Bank. For foreign born workers, the population refers to the labor force 15-64.
Data for European countries refer to Q1-Q3 2012, except Switzerland for which data
refer to Q2 2012. Data for the United States refer to 2012. The long-term unemployment
is defined as the share of unemployed for more than one year in the labor force.
113 Policy Background: Employment VISAs around the
World
Immigration laws as they apply to employment vary on two levels: the type of immigrants
they target and the way they operate. First, immigration policies vary depending whether
they target low-skilled immigrants or high-skilled immigrants. Traditionally, immigration
policies targeting high-skilled workers will attempt to attract them. On the other hand,
immigration policies aiming at low-skilled workers tend to discourage entry except for
some very limited and specific types of low-skilled workers.
There are two types of immigration systems: demand-driven or supply-driven
(Chaloff & Lemaître 2009, 17). In demand-driven systems, employers who have identified
foreigners with no right to work have to petition the immigration authorities for a work or
a residence permit for the future employee.4 Petitions from employers can be for temporary
migration or permanent immigration. Usually, if permission is granted to the foreigner,
he’s only allowed to work for his employer and in some cases not more than a “certain
amount of hours” on personal project or for other employers. In demand driven systems,
the petitioner for the VISA is the main employer of the immigrant.
In supply-driven systems, countries advertise that they are taking applications for
immigration directly from potential foreign-born nationals who are interested in
immigrating in the advertising country. Supply-driven system are typically merit-based
point systems where candidates for immigration are selected based on characteristics that
4
As we will see below, obtaining such permit is not unconditional. The employer and worker must often
meet some conditions of various sorts set by the immigration regulations.
12are deemed to facilitate labor market integration such as language proficiency, educational
attainment, age, work experience, presence of family in the host country, the existence of
a job offer or holding a specific set of skills for occupations for which there is a shortage.
Each characteristic is worth a certain amount of points. Candidates must exceed a minimum
point threshold to be considered for admission (Chaloff & Lemaître 2009, 17). Typically,
supply driven systems are used for permanent immigration while demand driven systems
are used for temporary migration.
It is important to note that immigration laws and policies are as complex, if not
more complex, than tax codes. This section does not provide a detailed and exhaustive
overview of all these laws and policies. Rather it provides some general descriptions of
their mechanisms and goals.
3.1 Immigration Policies and High-Skilled Migration
Most OECD countries have implemented various immigration policies targeting high-
skilled workers (see Appendix 1). However, while some countries like Canada and
Australia have developed policies where high-skilled immigration is part of an overall
development strategy (Chaloff and Lemaître 2009, 30), other countries like France,
Norway, and the United States' approach to immigration has been one of protecting native
workers while still permitting employers to meet their needs within limits.5
5
It's beyond the scope of this chapter to analyze the role that politics and private interest groups play
behind these goal of protecting native workers. As we will see below the added layer of proving that
hiring a foreign worker is not displacing a native worker increases costs for employer to hire foreign
workers.
133.1.1 Demand-Driven Systems
In demand-driven systems, an employer who wants to hire a highly skilled foreign worker
will petition the immigration authorities to allow the worker to migrate temporarily and, in
some circumstances, to immigrate and become a permanent resident if the employer
believes that the high-skilled worker will be a long lasting member of the business. Most
OECD countries, including the countries that use a point system, rely on employers
petitioning for working VISAs for temporary migration. Traditionally, the goal of these
working VISAs, particularly the temporary ones, is to meet skill shortages.
Most countries require employers to pass a labor market test to ensure that no native
worker will be displaced by an immigrant. The characteristics of the labor market test vary
across countries depending of the role played by public employment services in matching
workers with jobs. Not only are employers required to advertise the job vacancy for some
period of time (the length of which varies depending of the country) but in many European
countries employers are also required to list the job opening in a public employment
services' office. In some cases, the public employment services may refer candidates to the
employer or may limit intervention to approving the request after the job has been
advertised for a certain period of time. Other countries require employers to demonstrate
that they attempted to fill the position before offering the job to a non-resident. Some
countries such as France and Norway apply a discretionary consideration of the "added
value" of hiring foreign workers in terms of added new skills or resources brought by these
workers. In some countries, such as Denmark and Iceland, unions are directly involved and
any request for a working VISA is submitted to the relevant union to confirm there is a
shortage and for approval (Chaloff and Lemaître 2009, 19-20).
14Countries that require employers to submit to a labor market test also have
developed a shortage occupation list. Employers who petition for working VISAs for an
immigrant who will occupy a job listed on the shortage occupation list are exempt from
advertising the position. These shortage occupation lists are often drafted regionally in
collaboration with the public employment services, employers, and trade unions. France
drafts its shortage occupation list using vacancy data. In the United States, the shortage
occupation list, Schedule A, is very short. The current list includes physical therapists,
professional nurses, sciences and arts, and performing arts (United States Department of
Labor 2013).
Finally, some countries apply a quota limiting how many VISAs they will grant to
employers. Australia, Austria, Italy, Norway6, Portugal, Switzerland, and the United States
have quotas for their temporary migration programs.
In 2009, the European Union created the "EU Blue Card" Directive to attract high-
skilled third-country nationals to come to Europe "to address labor shortages, […] to
sustain its competitiveness and economic growth" (Council of the European Union 2009,
17). Currently, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia,
Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden have
adopted the EU Blue Card Directive. The "EU Blue Card" is inspired by the US Permanent
Residency Card or "Green Card. " It is a work permit that allows high-skilled non-EU
6
In the case of Norway, even if the quota is full, employers can still petition for a permit following
Norway's labor market test where the Public Employment Service performs a labor market assessment
(Chaloff and Lemaître 2009, 48).
15citizens to reside and work in any country in the European Union (with the exception of
Denmark, Ireland, and the UK) (Council of the European Union 2009, 21).7
Countries that have incorporated the "EU Blue Card" Directive into their domestic
legislation have either substituted it for their previous immigration system or added on top
of the existing system. Depending on the country, the employer must petition for the "EU
Blue Card" Directive on the third-country national’s behalf and in other cases, the
immigrant must petition for it. The EU Blue Card is valid for a period of one to four years.
Applicants are notified within a period of 90 days after the application has been submitted
whether their application has been accepted. In addition, some countries can put a quota on
the number of admissions under the "EU Blue Card" Directive system.
There are several conditions the candidate has to meet to qualify for an EU Blue
Card. The candidate must produce a work contract or binding job offer with a salary of at
least 1.5 times the average gross annual salary paid in the Member State concerned (for
certain professions where there is a particular need for third-country workers, the Member
States may lower the salary threshold to 1.2). 8 The candidate must have a valid travel
document and a valid residence permit or a national long-term VISA, and proof of health
insurance. For licensed professions, documents must show that the third-country national
7
However, unlike the US "Green Card', the EU Blue Card doesn't necessarily grant permanent
residency. Application for permanent residency can be granted after 5 years of legal and continuous
stay in the European Union. In order to fulfil the requirements of 5 years of legal and continuous stay,
the EU Blue Card holder can accumulate periods of residence in different Member States (Council of
the European Union 2009, 26).
8
For some countries, the employer can be required to make an offer more than then 1.5 times the
average salary and in others it can be lower. In the Czech Republic, the benchmark is the average for
the country and, in Finland, it has to be higher than the average for the country. In the Netherlands, the
gross annual salary has to be at least EUR 60,000 (OECD 2013, 49)
16meets the legal requirements, and for unlicensed professions, the documents must show the
relevant higher professional qualifications. In addition, the applicant must not pose "a
threat to public policy, public security, or public health" (Council of the European Union
2009, 22). The third-country national may also be required to provide his or her address in
that Member State. The EU Blue Card may be withdrawn if the holder does not have
sufficient resources to maintain himself or herself and family members without social
assistance or if he or she has been unemployed for more than three consecutive months or
more than once during the period of validity of the card (Council of the European Union
2009, 24). After two years of legal employment, they may receive equal treatment with
nationals with regards to access to any highly skilled employment. After 18 months of legal
residence, they may move to another Member State to take another highly skilled job
(subject to the limits set by the Member State on the number of non-nationals accepted)
(European Union 2009).
Despite the attempt of the EU Blue Card Directive to make Europe a more attractive
destination of highly skilled third-country foreign nationals, "the interests of the different
institutional actors involved in the EU decision-making process and the associated inter-
institutional struggles have considerably compromised the 'attractiveness' of the Blue Card
Directive" (Eisele 2013, 22). The requirements for petitioners are prohibitive whether it's
in terms of salary requirements, residency requirements before being able to move to
another member state, or who qualifies as a highly skilled immigrant.
173.1.2 Supply-Driven Systems
In most supply-driven systems, the country advertises that it is accepting applications for
immigration. Supply-driven systems are merit-based point systems where applicants must
meet a minimum threshold of points to be eligible. Eligibility depends of characteristics
deemed desirable so as to help candidate integrating into the labor force and the society
such as language proficiency, educational attainment, age, work experience in the country,
presence of family in the host country, the existence of a job offer or being in an occupation
for which there is a shortage (Chaloff and Lemaître 2009, 21-23). Unlike demand-driven
systems, countries using the point system don't necessarily require the applicant to have a
job offer to be eligible.9 However, some countries such as New Zealand and Canada give
points to applicants who have a job offer in hand. Other countries such as the United
Kingdom and Canada require that "arrivals have sufficient funds to support themselves
during a certain period while looking for work" to avoid these immigrants becoming a
fiscal burden (Chaloff and Lemaître 2009, 32). In Australia, new immigrants are ineligible
to get any social benefits for two years.
Since 2008, the United Kingdom, Denmark, the Netherlands, and Austria have
introduced a points system into their supply-driven and their demand-driven systems to
identify high-skilled workers. Japan and Korea have also introduced a point system into
their immigration program for high-skilled workers. Unlike countries like Canada,
Australia, and New Zealand where the point system is primarily used for permanent
9
The United States doesn't rely on a point system but under the EB1 VISA permanent residency can be
granted to "persons of extraordinary ability" of national or international renown without a job offer
(Chaloff and Lemaître 2009, 22).
18residency, in these countries, being admitted under the point system doesn't automatically
grant permanent residency. Denmark uses its point system to screen for high-skilled
immigrants and grants a "Green Card" to those who qualify for six months to find a job
either on the Job Card Scheme shortage list or a job paying at least 6,300 euros annually
(Chaloff and Lemaître 2009, 21). In the United Kingdom, the Tier 1 high-skilled labor
program is for an initial period of three years, which can be renewed. After five of
residence, the immigrant becomes eligible for permanent residency. In Japan, the point
system implemented in May 2012, "preferential treatment is given to university professors,
academics and researchers, doctors and other professionals with highly specified
knowledge or skills. It also favors corporate executives and managers" (OECD 2013, 266).
3.2 Immigration Policies and Low-Skilled Migration
Most countries' immigration policies have focused on limiting the entry of low-skilled
workers despite markets showing an increasing demand for low-skilled workers (OECD
2008, 133).10 Historically, this wasn't always the case. Between the 1940s and until 1974,
most OECD countries had guest worker programs for low-skilled workers to alleviate the
upward pressure on low-skill worker's wages resulting from domestic labor shortages
created directly or indirectly by the Second World War. In Western Europe, the goal of
these programs was "to help speed up reconstruction and to compensate in part for wartime
manpower losses"(Castles 1986, 761-762). However, in Europe, these programs continued
10
However, as we will see below, in Europe, there seems to be a return to recruiting low-skilled migrant
workers to meet the market demand.
19past the reconstruction period and lasted until the 1973-1974 oil crisis, which was the
beginning of a period of economic stagnation and high unemployment. In the United States,
the goal was "to replenish the United States' agricultural labor forces which had been
absorbed by the Armed Forces and defense plants" (Martínez 1958, 1). Like similar
programs in Europe this guest worker program continued past WWII, lasting until 1964.
Currently, in the United States, the guest worker program for low-skilled workers is
extremely limited, while in European countries, there has been a partial resurgence of guest
worker programs for low-skilled workers (Castles 2006).
3.2.1 Guest Worker Programs Pre-1974
3.2.1.1 Europe
After World War II, western European countries developed systems of temporary labor
recruitment first to replace the labor force lost to the war and to speed up reconstruction
but then temporary migrant labor recruitment was used to meet the intense demand for
unskilled labor that resulted from the rapid economic growth that these countries
experienced until 1973. Between 1950 and 1973, 30 million foreign workers rotated in and
out of West Germany, France, Great Britain, Switzerland, Belgium, the Netherlands, and
Sweden (Massey and Liang 1989, 202). In countries such as Great Britain, West Germany,
and France, the government and its immigration office had the monopoly on the recruiting,
the mobility, and the working conditions of the migrant labor force (Castles 1986, 762). In
other countries such as Belgium and Netherlands, the government recruited workers under
bilateral agreements with Southern European countries such as Italy, Spain, and Portugal.
However, in Netherlands, employers were performing the actual recruitment of the
20workers. In Switzerland, employers also recruited foreign workers but the government
controlled the admission and conditions of residence (Castles 1986, 765-766). In order to
ensure that the guest workers returned to their home country once their VISAs expired,
"government policies sequestered guest workers from the native population, restricted their
geographic and occupational mobility, and, more importantly, prevented or discouraged
guest workers from bringing along family members" (Massey and Liang 1989, 202).11
The 1973 oil crisis and the subsequent recession led Western Europe governments
to ban the entry of guest workers except for seasonal workers and workers from the
European Community (Castles 1986, 773). As a result, since the mid-1970s until the early
2000s, most low-skilled workers coming from countries outside the European Community
entered European countries as illegal immigrants, family members, or asylum seekers
(Castles 2006, 744). It's not until the early 2000s, that European countries started to
reestablish guest worker programs.
3.2.1.2 The US Bracero Program
The United States' entry in the Second World War and an increase in the demand for
agricultural goods created a shortage of labor forces for American farmers, which led to
the creation of a bilateral agreement between the United States and Mexico called the
Bracero Program. This program was initiated in 1942 lasted until 1964. During that period,
4.5 million Mexican migrant workers came to the United States on temporary VISAs not
11
In Great Britain, in the European Voluntary Worker program, which lasted until 1951, only single men
and women were eligible to participate in the guestworker program and they were rarely allowed to
bring any dependents (Castles, 1986, 762).
21to exceed six months. The Bracero Program was exclusively a government-to-government
temporary guest worker program. The Mexican government recruited the workers who
were sent to special camps on the US side of the border where US government agencies
arranged for the employment, wages, working conditions, and transportation of these
workers. In addition, "the braceros were limited in their geographic, social, and
occupational mobility. They were confined to agricultural labor in southwestern states; and,
as it was in Europe, they were not eligible to bring in their dependents"(Massey and Liang
1989, 203-204).12
The Bracero program began being phased out in 1960 and was terminated in 1964 under
the pressure of religious and labor organizations (Massey and Liang 1989, 204).
3.2.2 Contemporary Programs
Despite the reluctance of OECD countries to allow the entry of low-skilled temporary
workers, in the past decade, some countries have introduced low-skilled migration
programs (Appendix 2). All these programs are employer driven and entry is contingent on
a job offer (OECD, 2008, p. 133).
12
In 1943, the Bracero program was also expanded to the railroad industry because several American rail
carriers reported suffering from severe labor shortage. By the end of 1944, more than 80,000 braceros
were working for the railroad industry. This program was suspended in August 1945 but it's not until
April 1946 that the last railroad braceros were returned to Mexico (Mandeel 2014, 172).
223.2.2.1 The United States
The United States has two guest worker programs for low-skilled workers: H-2A and H-
2B. The H-2A program was created in 1952 to provide an adequate temporary supply of
labor to the agriculture industry. Under the H-2A program, there is no limit on the number
of foreign workers who can enter the country to fill these seasonal farm jobs. East Coast
growers who did not rely on the Bracero program to find workers originally used this
program. Under the program, petitioners must obtain a labor certification. Petitioners must
demonstrate that there are not sufficient US workers who are able, willing, qualified, and
available to do the temporary work, offer a pay high enough to counter any adverse wage
effects on similarly employed US workers, provide housing, and cover one-way
transportation costs (OECD 2008, 158).
In addition, H-2A petitions may only be approved for nationals of countries that the
Secretary of Homeland Security has designated, with the concurrence of the Secretary of
State, as eligible to participate in the H-2A program. The period of stay cannot exceed three
years. A worker who has held aH-2A nonimmigrant status for a total of three years must
depart and remain outside the United States for an uninterrupted period of three months
before seeking readmission as an H-2A nonimmigrant. The migrant worker can bring his
or her spouse and unmarried children under 21 years of age. They may seek admission in
H-4 nonimmigrant classification. However, family members are not eligible for
employment in the United States while in H-4 status (U.S. Citizenship and Immigration
Services 2014, 4). In 2012, 65,345 H-2A VISAs were issued (Wilson 2013).
Despite the fact that there is no cap for the H-2A program is largely unused because
employers face burdensome requirements such as proving that wages paid to foreign
23workers won't adversely affect native workers, provide housing, and cover one-way
transportation costs (Powell and Gochenour 2013, 4). The H-2A program also mandates
that "employer must hire local workers even if they apply during the first half of the foreign
worker's contract" (OECD 2008, 159, Annex Table II.A1.2). As a result, "only 5 percent
of the U. S. agricultural labor force is currently employed under the H-2A program"
(Powell and Gochenour 2013, 5).
The other guest worker program for low-skilled workers is the H-2B program,
which is reserved for non-agriculture industry, particularly landscaping, cleaning,
hospitality, and construction. The H-2B program is similar to the H-2A program in its
requirements but, unlike the H-2A program, a quota is in place. "The H-2B cap set by
Congress is 66,000 per fiscal year, with 33,000 to be allocated for employment beginning
in the first half of the fiscal year (October 1-March 31) and 33,000 to be allocated for
employment beginning in the second half of the fiscal year (April 1 - September 30)" (U.S.
Citizenship and Immigration Services, 2014). The requirements under the H-2B program
such as ensuring that US workers are not adversely affected by the hiring of foreign
workers have discouraged many employers from using this program and who have been
forced by the U. S. Department of Labor to increase hourly wage by more than 50% in
some cases (Sell, 2011). As a result, while the number of H-2B VISAs is capped at 66,000
each year, "there was a 48% decrease overall in the number of H-2B temporary program
positions requested in fiscal year 2010 compared with fiscal year 2009, and a 39% decrease
in the number of positions certified over the previous fiscal year" (Sell 2011). Between
2009 and 2012, the number of positions certified has decreased from 154,489 in 2009 to
2475,458 in 2012, which represents a 51% decrease in the number of position certified (U.S.
Department of Labor 2013, 6).
3.2.2.2 Other OECD Countries
Since the early 2000s, European countries have had policies that allow employers to
petition for temporary VISAs for low-skilled workers in some sectors of the economy or
certain occupations but in a limited manner. Most countries grant temporary working
VISAs and demand that at the end of the period the workers return to their home country.
To ensure compliance, particularly for VISAs related to seasonal work, countries give
priority access allowing employers to rehire the temporary workers they have hired in the
past, and given priority access to these workers who can go through a somewhat less
burdensome bureaucratic process. These temporary workers who enjoy priority access also
can be granted priority or exemption when the countries have capped their temporary
migration programs (OECD 2008, 135).
The shortage lists discussed in the previous section for occupations can help on two
levels. First, they can help employers to bypass the labor market test. Second, they can help
lower-skilled workers to migrate to countries where otherwise only high skilled are usually
allowed.
Temporary labor migration in OECD countries decreased because of the crisis. Between
2006 and 2008, temporary labor migration was around 2.5 million workers. Following the
crisis, temporary labor migration started to decline to reach 1.96 million workers in 2011
(OECD 2013, 26, Table 1.5). Data from 2006 on low-skilled workers show that, for the
age group 25-34 years old, 29.6% of the low-skilled labor force is foreign born and 31.3%
25of the foreign-born labor force is low-skilled. Of the total working-age population (age
between 15-64 years old), 20.7% of the low-skilled labor force is foreign born and 31.5%
of the foreign-born labor force is low-skilled. In the United States, when looking at the
total working age population, foreign-born workers represent 38.7% of the low-skilled
labor force and about 30.9% and 28.8% of the foreign-born labor force is educated. These
numbers rise to 54.1% and 30.9% for 25-34 years old (OECD 2008, 128).
4 Assessing Employment VISAs around the World
There are a number of ways the employment VISA policies might be evaluated. One could
study the make-up of the immigration population for each country and the skill level of
incoming immigrants. For example, if more immigrants come to seek asylum or family
reunification purposes as opposed to work, one could conclude that the immigration laws
in terms of attracting workers are less effective than those countries where more
immigrants come to work.13 Another way to evaluate immigration policies would be to
assess how effective these policies are in meeting their own goals. Assuming that several
countries have the same objective of attracting high skill workers, one can compare which
country attracts the most high skilled immigrant workers. 14 If the immigration policy
13
It does not necessarily mean that some of these immigrants don't want to work. I means that when
comparing immigrating costs, they find it is easier to immigrate seeking asylum or marriage than
immigrating through work. In addition, asylum and family reunification tend not to be subject to
discretionary limits so the incentives "to get married" with a native to immigrate are greater if it's
easier to immigrate this way as opposed to obtain a job offer first and to have the employer and
potential employee bear additional costs in obtaining a VISA or a permanent residency card.
14
Obviously, there are many factors that can explain why some people chose to immigrate to a specific
country as opposed to others such as geographic proximity, the attitude toward immigrants, the
26attempts to attract immigrants with specific skills one can assess whether wages for these
specific occupations that are in shortage declines as a result of an influx of immigrants
occupying these jobs. A relative wage decline would indicate that the shortage had been
relieved. One could also look at the prevalence of illegal immigrants. Most illegal
immigrants come to take advantage of employment opportunities. A high number of illegal
immigrants in the workforce indicates that the legal immigration procedure is failing to
adequately meet employer needs. These last two criteria are particularly important.
Because work VISA programs are biased against low-skilled workers, some employers in
need of lower-skilled workers are unable to legally hire them. These employers confront a
choice between seeing their costs of doing business increase or hiring illegally.15 Before
we address how well these migration policies meet their goals, it is important to critically
examine some of the corerequirements and goals of these policies.
4.1 The Non-Neutrality of Immigration
Most immigration programs have one core requirement in common. Immigration, whether
temporary or permanent, must not adversely affect the wages and working conditions of
prevalence of immigrants of the same national origin in that country, the demand for their labor, and
also the size of the welfare state and how easy it is to collect some of these benefits. Though, for the
last variable, research shows that welfare generosity has little, if any, weight on deciding where
immigrants elect to immigrate except for those seeking asylum. See, for example, Zavodny (1999) and
Kaushal (2005). Also one cannot ignore that the matching problem employers-employees might be
aggravated by non-immigration related laws such as licensing. Therefore, in this case, the problem
wouldn't be the immigration laws but, rather, the licensing laws that don't recognize immigrant's
education and training to practice some professions.
15
Hiring illegally these workers is not without costs for these businesses. But as long as the expected
costs of hiring these workers illegally is less than the costs of not breaking the law, these employers
will choose to hire these workers illegally.
27similarly employed native workers even though the rationale for recruiting foreign workers
is to prevent market forces from responding to a shortage of workers within the domestic
labor market. Typically, when market forces are allowed to work, labor shortages cannot
persist. Employers bid up wages until more people enter the workforce or until it becomes
less costly to substitute capital for labor. This is not without consequences. Increasing costs
of production means that fewer goods and services will be produced and that consumers
will have to pay higher prices for what is produced.
Therefore, recruiting foreign labor force is seen as an alternative mechanism to
resolve these labor shortages and prevent costs from rising without affecting the native
labor force (Massey and Liang 1989, 201-202). Unfortunately, the assumption that
immigration is neutral with regard to affecting the wages and working conditions of native
workers is impossible to satisfy. The Bracero program experience shows that native
workers were affected by immigration as employers preferred hiring Bracero workers
because of their willingness to accept lower wages exchange for working and living in
extremely poor conditions (Mandeel 2014, 178).
To further illustrate the case that immigration is not without an effect on native
worker's wages, one can look at what happened to wages once the Bracero program was
terminated. As Wise (1974) showed, after the Bracero program was terminated, wage rate
increased by 67% and domestic employment increased by 262% in the production of winter
melons and wage rate increased by 12% and domestic employment increased by 51% in
the production of strawberries in California. However, these benefits to native workers
came at a cost. Overall production of winter melons in California fell by 23%, total
employment decreased by 22%, acreage planted was reduced by 26%, and prices increased
28by 6%. Similarly, the production of strawberries in California dropped by 4%, prices
increased by 11%, total employment fell by 16%, and acreage planted reduced by 15%.
Similarly, the end of the Bracero program had a significant negative effect on the
cultivation of white asparagus, which required four times more labor than tomatoes. Fifteen
years after the program was terminated, "by 1979, asparagus acreage was only 55% of its
postwar peak in 1959" (Mandeel 2014, 182). The end of the Bracero program also
precipitated the mechanization of American farming (Mandeel 2014, 182).16
Similarly, Svorny (1991) shows that if the United States had not liberalized its
immigration restrictions on the market for physician services from 1965 to 1976, physician
earnings would have been 11% higher by 1971. On the other hand, she estimates that "the
dollar value of the benefits to consumers from the 1965 liberalization of immigration
restrictions reached 2.9 billion dollars by 1971 (in 1967 dollars)" (Svorny 1991, 331).
There is little doubt that immigration affects native workers despite the requirement from
immigration authorities that immigration doesn't adversely affect native's wages and
working conditions. However, we cannot ignore that the significant benefits associated
with immigration in the form of increased production and lower prices. As Zachariadis
(2012, 298) shows "a 10% increase in the share of immigrant workers in total employment
decreases the prices of final products by as much as 3%." The entire point of employment
based immigration is to get the net benefits associated with immigration (see chapter 2) but
not everyone benefits equally from immigration and some workers who directly compete
16
Lew and Cater (2008) show that the adoption of the tractor by farmers on the US Northern Great Plains
is the direct result of the US immigration authority closing its border to European immigrants in the
mid-1920s.
29with immigrants lose, at least in the short run. The economic gains an economy receives
are impossible to realize without violating the neutrality requirements. Only the
mismeasurement and poor enforcement of this absurd requirement allows these
employment VISA programs to secure economic gains for their respective citizens.
4.2 Comparing Migration Policies
Chaloff and Lemaître (2009, 30) compare policy choices for the highly skilled in ten
countries of the OECD and find that none of the policies that these countries have adopted
or modified to attract high-skilled workers "actually supports immigration of the high
skilled: there are no subsidies, no facilitation of the recognition of qualifications; no special
job listings abroad. "A true active immigration policy should work toward facilitating
matching employers with foreign-born prospective employees such as having job fairs like
in Australia or in the United Kingdom and developing bilateral agreements between
countries as opposed to raising barriers to entry (Chaloff and Lemaître 2009, 30).17 Chaloff
and Lemaître identify advantages and disadvantages to the supply-driven and demand-
driven systems. The point-based systems were designed not to respond to shortages in the
labor market but rather to meet a population target. The point-based systems was developed
when cross-border recruitment via the Internet was not possible and, therefore, it made
sense to invite people who had a set of highly desirable characteristics to immigrate even
if they didn't have any job offers. However, recent research has shown that new immigrants
17
Some countries do have bilateral agreements to bring temporary workers.
30have difficulties finding jobs that match their skills often due to socio-demographic factors
such as socio-economic status, language proficiency, previous work experience,
unfamiliarity with the local labor market but also the fact that the domestic population's
educational attainment increased (Frank 2013, Chaloff and Lemaître 2009, 33).
According to Chaloff and Lemaître (2009, 32), the advantages of demand-driven
systems are that they tend "to ensure a close link between immigrant worker entries and
labor market needs," and that the risks of the immigrant becoming financial burden are
significantly lower because the immigrant is immediately employed upon arrival.
However, in demand-driven systems, the employers' decision to hire foreign-born workers
can have external costs in the long run, particularly if they lose their job, if the candidates
were wrongly chosen, needs are overestimated, or an economic downturn occurs (Chaloff
and Lemaître 2009, 32). Chaloff and Lemaître's (2009, 42) main conclusions are that, in
recent years, supply-driven and demand-driven systems are converging in terms of their
objective of attracting high-skilled migrants. The main issue is that an increasing number
of countries will have incoming labor force cohorts which are smaller than outgoing ones
and, therefore, OECD countries will need to create more active recruiting policies rather
"than just allowing for the possiblity of granting permits to employers or to aspirant
immigrants based on credentials."
4.3 How Well Do Countries Meet Their Objective?
Given that most countries have more or less attempted to attract high-skilled workers, one
way to assess theirsuccess in attracting highly skilled immigrants is to observe the
participation of high-skilled immigrants in the labor force. This information can be
31examined through three different ratios. First, of the immigrant population that enters the
labor force, what percentage qualify as highly skilled. Second, from all highly skilled
increasesin the labor force, what is the percentage of immigrants. And third, from the
change in total labor force, how much is explained by highly skilled immigrants.
In Greece, Italy, Portugal, Finland, Spain, Austria, and United Kingdom, 25% or
less of their immigrant population that entered the labor force between 2000 and 2010
qualify as highly skilled labor. Only Sweden, Switzerland and Ireland are close to having
highly skilled workers as 50% of their immigration and tiny Luxemburg is the only country
to exceed this threshold. In terms of highly skilled immigrants' contribution to the total
highly skilled increase in the labor force Spain, Austria, United Kingdom, Switzerland, and
Ireland show larger fractions of their incrase attributed to immigration. In the case of
Luxemburg, 80% of the increase in high skill labor force is explained by immigrants.
Finally, Ireland, Switzerland, Spain, Belgium, and United Kingdom are the countries where
new highly skilled immigrants representa larger share of total new labor force population
(irrespective of skill level).
32Figure 6. Contribution if high education level to the growth in labor force between
2000 and 2010.
High/New Immigrants High/Total High High/2000 L. Force
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: Based on OECD (2012).
As an illustrative measure of success, Table 4 shows and ranks the countries in
terms of the contribution of highly skilled immigration into the labor force through three
ratios: (1) the share of highly skilled immigration to total immigration that joins the labor
force, (2) the share of highly skilled immigration to total new highly skilled labor force,
and (3) the share of new highly skilled immigration to the total labor force. All three ratios
are for the period 2000-2010. We also built a simple average score based on the three
rankings. We then rank the countries based on this averagescore. Measuring failure in
immigration policy by examining illegal immigration is more difficult because information
on illegal immigration is lacking and innacurate due to the nature and status of these
33immigrants. Next to the rankings we show estimates (when available) of illegal
immigration as a percentage of total population. 18 The table also shows if the listed
countries have a quotaand a shortage list as part of the immigration policy.
Table 4. Ranking in attracting high skill (HS) immigrants into the labor force.
Ranking
Ranking Ranking (High Skill Illegal Imm.
(High Skill (High Skill Imm. /2000 (% of total
Imm. /New Imm. /Total Labor Score Quot Shortag population
Country Immigrants) High Skill) Force) Score Ranking a e list )
LUX 1 1 1 1.0 1 No No N/A
ICE 2 2 2 2.0 2 N/A N/A N/A
SWI 3 3 3 3.0 3 Yes Yes N/A
BEL 5 7 5 5.7 4 No Yes N/A
SWE 4 8 7 6.3 5 No No N/A
SPA 14 4 4 7.1 6 Yes* Yes 0.72
GRB 12 5 6 7.7 7 No Yes 1.03
GER 6 9 11 8.7 8 No Yes* 0.37
NOR 8 10 9 9.0 9 Yes* No N/A
AUT 13 6 10 9.7 10 Yes No 0.43
USA 11 11 8 10.0 11 Yes Yes 3.80
FRA 10 14 12 12.0 12 No Yes 0.17
DNK 9 15 13 12.3 13 No Yes N/A
NTD 7 17 14 12.7 14 No No 0.54
ITA 17 12 15 14.7 15 Yes* No 1.10
PRT 16 13 17 15.3 16 Yes No N/A
GRC 18 16 16 16.7 17 No No 2.22
FIN 15 18 18 17.0 18 No Yes N/A
Source: Based on OECD (2012) and CLANDESTINO. Illegal immigration corresponds
to year 2008, with the exception of Netherlands (2005).
Note: Label “Yes*” in the quote column means that there are exceptions to the quota
limit. See the appendix for more details.
18
Data is from 2008 for most countries except the Netherlands which is 2005 data because 2008 was
unavailable. No years were available for the other countries.
34Table 4 indicates that there is no clear correlation discernible between quotas or
shortage list with a high participation of highly skilled immigration in the labor force. In
terms of attracting highly skilled immigrants into the labor force, the United States ranks
10 out of 18. But in terms of illegal immigration with respect to total population the United
States shows the highest value of all countries (for which there is data.) The United States
has both, quotas and shortage lists. The quota, in particular, is highly restrictive falling
considerably below the immigration applications (and potential immigrants that do not file
an application due to the unlikeliness of getting permission to immigrate). Spain has quotas
and a shortage list but it has a low ratio of illegal immigration to total population, which
might be explained by the fact that Spain's quota system is flexible. Greece is the opposite.
It has neither quotas nor a shortage list but has a high share of illegal immigration. This is
likely due to the fact that Greece has weakened border control characterized by a lack of
enforcement resulting from the economic recession and budget restrictions (Stevis 2012).
The illegal immigration ratio in Greece had been falling until it rose in 2007.19 The United
States, on the contrary, has a stable high share of illegal immigration.20 It is certainly not
conclusive but the data suggest the possibility that quotas and shortage lists (which also
work as quotas) have a positive impact on illegal immigration while not impacting high
skill immigration.
19
Illegal immigration as percent of total population for Greece: 2004: 2.07%, 2005: 0.18%, 2006: 0.67%,
2007: 2.3%, 2008: 2.22%, 2009: 2.99%, 2010: 3.49%.
20
Illegal immigration as percent of total populatoin for the US: 2004: 3.2%, 2005: 3.5%, 2006: 3.9%,
2007: 3.9%, 2008: 3.8%, 2009: 3.5%, 2010: 3.8%.
35You can also read
